Lively Hong Kong land sale smashes expectations

Published: Monday, October 15, 2007, 15:09 [IST]

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HONG KONG, Oct 15 (Reuters) A coveted plot of land in well-heeled southern Hong Kong fetched a sharply better-than-expected US0 million in a frenzied government auction on Monday, underscoring rosy expectations for residential prices and economic growth.

Developers made a bee-line for the waterfront Aberdeen site with a view of the bay, pushing its price up to HK.71 billion in an hour of intensely competitive bidding -- exceeding analysts' forecasts by nearly 40 percent.

The 6,403 sq m (68,920 sq ft) site in Aberdeen had been expected to go for HK.1 billion, the mean of five analysts' predictions and already 64 percent more than its HK HONG KONG, Oct 15 (Reuters) A coveted plot of land in well-heeled southern Hong Kong fetched a sharply better-than-expected US$740 million in a frenzied government auction on Monday, underscoring rosy expectations for residential prices and economic growth.

Developers made a bee-line for the waterfront Aberdeen site with a view of the bay, pushing its price up to HK$5.71 billion in an hour of intensely competitive bidding -- exceeding analysts' forecasts by nearly 40 percent.

The 6,403 sq m (68,920 sq ft) site in Aberdeen had been expected to go for HK$4.1 billion, the mean of five analysts' predictions and already 64 percent more than its HK$2.5 billion initial asking price.

Analysts said that boded well for future residential prices and the bottom line of developers from market leader Sun Hung Kai <0016.HK> to Li Ka-shing's Cheung Kong Holdings <0001.HK>.

The HSI Properties sub-index gained as much as 1.8 percent as real estate counters rallied, although the broader market firmed in the afternoon.

''Flour is more expensive than bread now. That means property developers are really upbeat on the market's outlook,'' said Alex Tang, research director at Core Pacific-Yamaichi International.

Consumer confidence is running high in Hong Kong despite concern over how a U.S. economic slowdown might hurt trade.

Indeed, with interest rates on the wane and a tight labour market still propping up salaries in the city, developers are expected to keep pushing up home prices.

The final price tag on the Aberdeen site, won by a K.Wah International <0173.HK> consortium that included Sino Land <0083.HK> and privately run Nan Fung, was more than twice the initial asking price.

Witnesses said the auction -- usually staid, orderly events -- was one of the liveliest in years.

Unusually, bidders competed to raise auction paddles with some not even bothering to wait for an asking price to be announced.

Mid-sized players Sino Land and K. Wah would both own 35 percent of the project, with the remainder to be taken by Nan Fund.

A second, much less valuable plot on the sparsely populated island of Lantau is going on Monday for at least HK$200 million.

REUTERS DKS DS1435 .5 billion initial asking price.

Analysts said that boded well for future residential prices and the bottom line of developers from market leader Sun Hung Kai <0016.HK> to Li Ka-shing's Cheung Kong Holdings <0001.HK>.

The HSI Properties sub-index gained as much as 1.8 percent as real estate counters rallied, although the broader market firmed in the afternoon.

''Flour is more expensive than bread now. That means property developers are really upbeat on the market's outlook,'' said Alex Tang, research director at Core Pacific-Yamaichi International.

Consumer confidence is running high in Hong Kong despite concern over how a U.S. economic slowdown might hurt trade.

Indeed, with interest rates on the wane and a tight labour market still propping up salaries in the city, developers are expected to keep pushing up home prices.

The final price tag on the Aberdeen site, won by a K.Wah International <0173.HK> consortium that included Sino Land <0083.HK> and privately run Nan Fung, was more than twice the initial asking price.

Witnesses said the auction -- usually staid, orderly events -- was one of the liveliest in years.

Unusually, bidders competed to raise auction paddles with some not even bothering to wait for an asking price to be announced.

Mid-sized players Sino Land and K. Wah would both own 35 percent of the project, with the remainder to be taken by Nan Fund.

A second, much less valuable plot on the sparsely populated island of Lantau is going on Monday for at least HK0 million.